Rob Bodor: From Digital Prototyping to Manufacturing Powerhouse

Yeah, thanks, glad to be here.

Sure, and thanks again for having me. I'm excited to talk to you about Protolabs today. I've actually read the Titanium Economy book, and I believe that Protolabs is a great example of a Titanium Economy company in the US. We're an industrial technology company with a great growth story. We are a 25-year-old global business headquartered in the Minneapolis area, and we're a contract manufacturer who makes custom mechanical components. Our mission is to empower companies to bring new products to market by offering the fastest and most comprehensive digital manufacturing services in the world. So we get to work for the most innovative companies in the world. We serve companies making medical devices, electronics, aerospace and automotive vehicles, and we serve many industrial tech companies. We serve the vast majority of the Fortune 500 companies in those industries, and in addition, we serve another 50,000 small, midsize, and large companies every year. And I guess I would add that we're a digital manufacturer, and I mean digital in two ways. First, we conduct our business over e-commerce and other B2B commerce platforms online. Secondly, we've built out digital twins of our manufacturing process end to end. So we're digital on the front end in how we engage with customers, and we're digital on the back end, enabling us to use a high degree of automation in our manufacturing and fulfillment model. So this makes us unique in the world of contract manufacturing.

Yeah, well, as you point out, we began as a digital manufacturer focused on prototyping. This was a direct result of the digital twin technology that we developed. The company was founded in 1999 with the mission of making contract manufacturing easier to use, faster, cheaper, and more accessible. And we believed that we could use software to do that by digitizing the process. So we created an e-commerce interface for buying custom manufactured components. We were the first company in the world to transact custom manufacturing online in this way. But perhaps more importantly, we digitized our manufacturing process. So to make a part or to even quote it, we first virtually manufacture it. Said another way, we simulate its manufacture within our factories, and we're able to do that because we've characterized our manufacturing processes and capabilities down to a very fine detail. That's the digital twin that I mentioned before. And this digital twin allows us to know the exact cost and time to manufacture, and so we can give a firm quote to our customers immediately. It also allows us to provide them input on the part's design and manufacturability, and we do that to identify and address design or manufacturing concerns before making the parts, to ensure that they're going to successfully meet customers' needs. In addition, this allows us to manufacture complete parts in a day. We've taken a lot of time and cost out of the upfront process of traditionally doing custom manufacturing. And so being able to make a part in a day is faster than anyone else in the world, and I'm proud to say that after more than two decades, that still holds true. So our speed and low cost to produce those first parts made us a tremendous partner for engineers who were prototyping new product designs, and that's why we focused on prototyping, and prototyping drove our growth for two decades. But what motivated the evolution to expand to production was really a desire to serve our customers' needs. Customers were asking us to produce production parts for them, not just prototypes. They wanted to be able to stay with one partner through the life cycle of their products, and thus reduce the risk of changing suppliers midway and reduce the cost and time associated with changing suppliers. So we had to think about how we could serve those needs, and what we found was that in addition to speed, our digital process ensures high reliability and repeatability because we've taken out a lot of human variability in the process. And in production, quality is often about just that, about eliminating variation. And so our process does that inherently. So we see an incredible opportunity in production to grow our business, but also to serve our customers and help them launch innovative new products at scale while reducing their risk. I can give you an example of a recent customer named Sal Medics. They're a medical company that makes devices for water sterilization, and we've partnered with them to take their products from design to first 3D printed prototypes, to then injection molded prototypes, to then high volume production molded parts. And this process reduced their risk and helped them to go to market faster by not needing to change suppliers as they went through their product life cycle. And then I would just add that the market for production manufacturing is very large. It's actually far larger than prototyping, and so we see this as a tremendous growth opportunity where Protolabs can be highly differentiated in many areas.

Yeah, that's a great question. So our comprehensive capability to be able to serve our customers across the product life cycle is actually quite differentiated. First of all, we're the fastest manufacturer in the world. So in prototyping, our customers, we serve over 50,000 customers who are used to relying on us for their prototyping. So it's very natural for them, as they ramp into production, to want to stay with the same supplier, especially when they're happy with our quality and reliability and so forth. We've had to expand our capabilities to be able to serve their needs in that area while being very cost-effective at those higher volumes, and we've done that. And now that we have that end-to-end capability, we can truly be their partner throughout the product life cycle, and that's unique. Most manufacturers have to specialize, right? Those that have designed their operations and built them and made the investments necessary to support predictable high volume manufacturing struggle with volatility, they struggle with low volume orders, right? And vice versa. But the digital manufacturing model that we've developed works across all parts of the product life cycle, and that allows us to serve our customers in that way. And that's a pretty unique and differentiated model that we bring to market.

Yeah, absolutely. As you point out, we offer four manufacturing services, meaning that we manufacture mechanical components through four different manufacturing technologies, and we do that in plastics and metals. Those technologies are injection molding, CNC machining, 3D printing, and then sheet metal fabrication. These are four of the most commonly used technologies for manufacturing mechanical parts, and they allow us to make custom components across a broad range of materials of both metals and plastics in high and low quantities. And so we work with companies who are designing and launching new products, and when they're evaluating their designs, they are often looking for quick turnaround, right? So that they can test and learn and further iterate, and we provide them that. Furthermore, in early stages of development, there are often many unanswered questions about how the product will be manufactured, using which technologies, which materials. You often have to try different materials to make sure that you're getting the properties you need, and we have a very broad range of materials and manufacturing technologies to choose from, and we can guide the customer in their selection to meet their target price, their target quantities, their target physical characteristics, and what have you.

Yeah, thank you. Well, I guess I would say that my career trajectory has not been a straight line. As you kind of summarized, I've had the privilege of having many different roles in innovation, in technology leadership, in general management, and other areas. I've been a consultant at McKinsey, and I've been a business leader working in companies large and small, from startups to large multinational corporations. And I guess I would maybe highlight two lessons that I learned in that journey. Firstly, it's important for me to always be open to learning, because I found that there's something, often many things, that you can learn from every situation and every experience. I learned from the difficult experiences and the positive ones, and every role helped me gain some perspective into the next role and helped me bring something new to the next role. Secondly, I think I found that the combination of disparate areas of thought and different views is just so often where innovation happens. And I think so much of economic growth is driven by innovation. I think it's really important to bring together people with different perspectives and points of view, because those different perspectives coming together is often the spark that leads to innovation. On the flip side, that can also cause friction, right? There can often be friction when you have these different points of view, but I lean into that, because if you can make it a healthy tension, again, that's where I've seen groundbreaking innovation come from. And that's true in new products, but I don't just mean in products. I think innovation can be in lots of forms, whether that's process improvement, org structure, better ways of operating, new market expansion ideas, right? It runs the gamut. And that's been a key learning for me. But I think doing this can be challenging, right? And it requires setting up the right environment of respect where everyone feels that they're heard and they have a voice. That's not always easy to do, but it pays dividends. So those are kind of my two lessons.

Yeah, well, that was a big transition for sure. I'm privileged that we have this amazing company and I have an incredible team, and that's made the transition certainly easier. But for me, the transition was around going from really being an operator who was focused internally, right? Most of my career, that was the case. And so there I was focused on delivering the day, the week, the month, the year, and focused internally. And in the CEO role, the focus is different. It's certainly more externally focused, and you have to be very mindful of multiple stakeholders. In addition, as CEO, the key roles that you play are setting the strategic agenda, aligning the resources and the investments behind that strategy, setting up the structure and building out the leadership team, and then empowering that team in that structure around that strategy to go execute and run it. And then, of course, communicating, communicating a lot, communicating repeatedly to all stakeholders: employees, customers, investors, and the communities where we operate, so that they understand who we are, what we stand for, what the strategy is, what we're executing, and making sure that you're setting the right culture. So this was certainly an adjustment for me, but it's been wonderful, and it's a big responsibility and I take it seriously, but I'm also loving it.

Yeah, as you point out, culture is very important, and setting the right tone and establishing that right environment which makes it safe for people to speak freely and bring their opinions and their best ideas is really key to driving innovation, right? That's the foundation of a culture of innovation. Furthermore, I think it's important to set the tone from the top that encourages people to take risk. And I believe that if everything you try works the first time, you're not taking enough risk and you're not thinking big enough. But that can be really hard for an organization. And so I spent a lot of time thinking about how can I, how can the leadership team, make sure that we're driving empowerment at every level in the organization, so that we have leaders at every level feeling that empowerment, feeling that same tone, and that comfort with bringing ideas forward and driving their ideas. But you have to make sure that your systems and your actions support your words around that, right? If you've got a lot of gates and a lot of bureaucracy, you're actually not empowering, regardless of your good intentions. So making sure you've got those systems in place that really drive that empowerment, I think, is critical as well.

Yeah, I think this is a tremendous technology with incredible potential to do everything that you said and more. And we still don't know all the potential and impact that it can have, but it is something that we invest in quite a lot and are seeking applications in the business all the time. We use AI and machine learning and certainly data analytics in a number of ways within the business. I'll give you some examples. We use them both on the factory floor and in the office, both customer facing and operationally. We use them really in many aspects of the business, and I'm not satisfied; there's a lot more opportunity for us to use them than we are. But just some examples: we use machine learning in pricing in multiple arenas, right? To predict customer price elasticity and understand our competitiveness in terms of pricing, making sure that we're priced to market, so forth. We use virtual agents in marketing and sales outreach and a number of other customer facing areas. We use machine perception for quality verification of our products and in inspection applications. We use it to verify equipment setup, inspect tool integrity, and other kinds of applications on the plant floor. Those are just some of the applications that we use today, and again, I think this is really still largely untapped, and there's a lot more opportunity for us in applications of machine learning and AI throughout the business.

Well, manufacturing is undergoing digital transformation, and just like industries before it, like finance, retail, media, and others, this is a fundamental transformation that manufacturing is undergoing, and it creates tremendous opportunities for economic growth. It means manufacturing, which is one of the largest global industries, can unlock all kinds of potential. It means we can make things in new ways, like through additive manufacturing, right? That's one aspect of digital transformation. But I think even more revolutionary, it means that as you think about the whole process of manufacturing, we can really change every part of that process, from design to prototype to production to inspection, and transform them to work in a way that is faster, more efficient, and more flexible all at the same time. So I think this is going to unlock a lot of new applications and new efficiencies. I think it enables us to open manufacturing to new customers, to smaller businesses, to developing economies, and things like that, reach other parts of markets that were hard to access before. So again, I think this is a trend that's unlocking tremendous economic growth, and it is really an exciting time to be in manufacturing today.

Yeah, well, first of all, I wholeheartedly agree with that assessment of the economy and the importance of the Titanium Economy and industrial tech in the US and throughout the world. I think it's a very foundational part of the US economy certainly. And the concept that sometimes the image that people have in their minds of manufacturing as being very physical work and sometimes operating in dirty environments and so forth is very far from the truth, right? At least in my experience with manufacturing, and as we've talked about digital transformation taking place in manufacturing, I think that becomes more and more true, right? That this is really very intellectual work that solves a lot of really important fundamental problems for the world. And that's what I see playing out. And from Protolabs' standpoint, our objective is to take advantage of this opportunity. We feel we're at the forefront of digital transformation and see a tremendous opportunity to grow and to take share over the next five years, as we, being the fastest manufacturer in the world all through digital technology, combine that with these production capabilities that enable us, again through digital enablement, to be highly reliable. And so we can serve our customers across their entire product life cycle, from early stage prototyping to production to even end-of-life replacement applications. I see this having a very positive impact on customers in many industries, including regulated and high requirement industries like medical and aerospace, where innovation moves quickly and they need partners who can move with them with that same agility. And so I think we're one example of a Titanium Economy company that's doing that, but we are certainly not alone, and I am very excited to see how this is going to play out over the next five years.

Thank you, it was my pleasure.